Expenditure Responsibility Assignment and High-Quality Equity of Compulsory Education—Empirical Analysis Based on OECD Countries

ABSTRACT

Education for sustainable development poses high challenges to governments and public finance. Compared with OECD countries, China’s local governments bear too much expenditure responsibilities with respect to compulsory education, which theoretically affects the high-quality equity of compulsory education. Through empirical analysis using cross-country data with the panel spatial model, it is found that the proportion of central government expenditure and the government’s educational effort both have a steady and negative impact on the regional variable coefficient of compulsory education completion rate. Unitary or federal regime does not have a significant impact on the result. This paper suggests establishing a sharing financing system among all levels of government. According to the minimum standard guarantee principle of basic public services, the central government, which has the strongest fiscal capacity, should establish the national standard and take the responsibility on coordinating and balancing education service among regions and promoting the inter-regional equity. Local governments are encouraged to provide education services above national standard in accordance with their fiscal capacities.